Morbi-based Asian Granito India Ltd (AGL) is planning to set up three new facilities in Gujarat for manufacturing value-added products. These facilities are expected to go online by April 2023. AGL is raising Rs 500cr for mega expansion through a rights issue of equity shares, for which it has filed draft papers with the concerned authorities.
According to chairman and managing director Kamlesh Patel (on left in image, with managing director Mukesh Patel), the greenfield facilities will produce large format polished glazed vitrified tiles (PGVT), sanitaryware and new age stone plastic composite (SPC) flooring.
Explaining why AGL is raising Rs 500cr for mega expansion, Patel says, “Our expansion plans are in line with trends emerging in the Indian and global tiles and bathware industry. And we are in a position to raise the required funds due to our strong balance sheet.”
According to Patel, “The Indian industry has been witnessing a significant shift from double-charge tiles to value-added large format GVT tiles and sabs. Although double-charge tiles still hold a major share of the overall market, GVT and PGVT are expected to grow at higher rates in the medium to long term. In sanitaryware, India is the second largest manufacturer after China and one of the fastest growing markets globally, with immense opportunities due to micro and macro factors and policy initiatives. SPC flooring is emerging as the fastest growing hard flooring product across the globe, due to its varied advantages over other solutions such as ease of installation, heat & water resistance, etc.”
Presently AGL operates in the GVT and sanitaryware segments through own manufacturing as well as third party sourcing. Following this expansion it aims to become a fully-integrated surfaces and bathware player, and enhance its profitability in the near to medium term. The three manufacturing facilities will be set up in Morbi through AGL’s fully-owned subsidiaries.
Future Ceramic Pvt Ltd will manufacture value-added large format glazed vitrified tiles in 800×1600 mm and 800×2400 mm formats. This facility, to be set up with an investment of Rs 175 crore, will have an installed capacity of 6.6 million sqm per annum.
AGL Sanitaryware Pvt Ltd, the subsidiary dealing with AGL-branded sanitaryware products, primarily sources from third party manufacturers outside India. The upcoming facility will give it a capacity to produce 0.66 million pieces annually, at an investment of Rs 50 crore.
AGL Surfaces Pvt Ltd is the subsidiary that will manufacture new-age stone plastic composite (SPC) flooring products. The facility will have a production capacity of 2.97 million sqm per annum and will take up investment of Rs 35 crore. This diversification is aimed at providing AGL an opening into the high growth export market for value-added flooring solutions.
Patel informs that the three subsidiaries will be able to achieve 45-60 percent capacity utilisation within their first year of operation, that is 2023-24. A budget of Rs 80 crore has been earmarked for their working capital requirements.
Besides capex, AGL will also set up a display centre at Morbi with an investment of Rs 40 crore. This will be a 5-storey complex spread over 1.5 lakh sft, which will showcase the company’s entire range of tiles, sanitaryware, bathware, quartz, engineered marble and SPC. AGL will also deploy the proceeds of the rights issue towards other strategic initiatives, brand building and marketing activities.
The company achieved a turnover of Rs 1,292 crore during fiscal 2020-21, with exports accounting for Rs 213 crore. It has nine manufacturing units, all located in Gujarat, 311 exclusive showrooms, and 13 display centres across India.